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Medicare HMO Drug Benefits Hard to Compare: Report

Originally published by Reuters Health, May 17, 2002

NEW YORK (Reuters Health) — Seniors enrolled in Medicare HMOs need more and better information to help them compare prescription drug benefits across various health plans, according to a new federal inspection report.

Unlike traditional Medicare, many HMOs offer additional benefits, such as coverage of prescription medications. But a large majority of plans that cover drugs are limiting coverage to a certain dollar amount, the Department of Health and Human Services’ Office of Inspector General (OIG) reported.

It’s difficult for beneficiaries to know exactly what their drug benefit includes because the information HMOs are providing is, in many cases, “incomplete, inconsistent, and confusing,” the OIG reported.

The analysis is based on a review of 374 health plans with dollar limits on drug coverage ranging from $200 to $12,000 in 2001. All of the plans included in the study contract with the Centers for Medicare and Medicaid Services (CMS) to provide benefits through HMOs or a combination HMO and point-of-service health plans.

Many plans failed to provide beneficiaries with the specific method used to calculate the amount applied to the limit for each prescription, the study found. When asked for specific prices for four commonly used drugs, 90% of the plans could not or would not supply the information, it said.

In some cases, HMOs provided inconsistent data on the dollar amount or the time period of their limit. And few provided information about whether co-payments are deducted from prescription prices applied to the dollar limit, although CMS does not require them to, it said.

The OIG calls for greater disclosure of the factors that go into determining drug limits, but CMS disagreed that such detailed information would be helpful to beneficiaries. Commenting on a draft version of the report, CMS Administrator Thomas Scully said that it’s difficult for most people to understand the complexities of drug benefit offerings, such as the pricing method used to apply per-prescription limits.

“Instead, we believe beneficiaries are far more likely to understand a benefit and be able to compare it across plans when they can see, for example, what it would cost to fill a prescription for one or two popular drugs on the market,” Scully noted.